June 11, 2008

 

US Wheat Outlook on Wednesday: Seen rising on corn spillover, technical buys

 

 

Technical buying and firm Chicago Board of Trade corn futures should carry U.S. wheat futures higher at the start of Wednesday's day session, analysts said.

 

Benchmark Chicago Board of Trade July wheat is called to open 8 to 10 cents per bushel higher. In overnight electronic trading, CBOT July wheat jumped 8 cents to US$8.17.

 

Wheat should see some technical buying and fresh short-covering now that the CBOT July contract has climbed back above US$8 and above its 200-day moving average, an analyst said. The bulls and bears are presently on a level near-term technical playing field in the markets, a market technician said.

 

Gains in CBOT corn helped pull wheat higher Tuesday and should lend more support Wednesday, traders said. July corn overnight set a fresh record high of US$6.86 1/2 amid worries about heavy rains in the U.S. Midwest.

 

There are some concerns about excessive wetness negatively impacting winter wheat in parts of Illinois, Indiana and Missouri, an analyst said. A new round of severe storms is expected Wednesday and Thursday across the western Midwest and on Friday in the east, DTN Meteorlogix said.

 

"This likely means more flooding concerns," the private weather firm said.

 

Periodic thunderstorm activity in parts of Nebraska, Kansas and possibly Oklahoma also is unfavorable for maturing wheat, Meteorlogix said. In the northern Plains, rain and thunderstorms will continue to build moisture for wheat but may also lead to flooding concerns, the firm said.

 

Still, wheat could come under pressure from profit-taking after climbing solidly higher Tuesday in the face of government crop reports seen as neutral or bearish, a trader said. The U.S. Department of Agriculture, as expected, raised its forecast for 2008 U.S. all winter wheat production and for U.S. wheat ending stocks in the reports.

 

The French state grains board, L'Office National Interprofessionnel des Grandes Cultures, meanwhile, trimmed its 2007-08 soft wheat ending stocks forecast by 142,000 metric tonnes to 3.094 million metric tonnes. Going into the end of the 2007-08 marketing year, French wheat saw a slight rebound in export competitiveness, ONIGC said in its monthly report.

 

In other news, the USDA said 100,000 tonnes of U.S. hard red winter wheat were sold to Nigeria for delivery in the 2008-09 marketing year, which began June 1. The announcement was made as part of the agency's daily reporting system.

 

The bulls' next upside price objective is to push and close CBOT July wheat above technical resistance at this week's high of US$8.38, the market technician said. The next downside price objective for the bears is pushing and closing prices below solid technical support at US$7.82, he said.

 

First resistance is seen at Tuesday's high of US$8.12 1/2 and then at US$8.25. First support lies at US$8.00 and then at Tuesday's low of US$7.86 1/2.